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Residential stamp duty and million pound homes

Less than 0.5% of homes in Britain will be affected by the increase in the stamp duty rate for multi-million pound homes announced in the recent budget, according to research by Lloyds TSB.

The research estimates that just 0.2% of all home sales in Britain are worth at least two million pounds and therefore subject to the new 7% stamp duty rate. Even in London, multi-million pound sales account for only 1.5% of all sales.

There are currently around 45,000 homes in Britain estimated to be worth at least two million pounds. As a consequence of the increase in the stamp duty rate for homes purchased for more than two million pounds from 5% to 7%, the average stamp duty bill for such homes will rise by 40%.

There were 739 million pound property sales in Great Britain in the first half of 2011. This is the 75% higher than in the same period in 2006 and 29% higher than in the same period in 2010. Over three-quarters of all two million pound plus sales are in London. More than half (57%) of these transactions were in Kensington & Chelsea and Westminster.

Suren Thiru, Lloyds TSB housing economist, said: “The impact of the increase in the stamp duty rate for homes sold for over two million pounds on the housing market is likely to be very limited. However, strong demand from wealthy cash rich buyers, as well as limited supply of such properties, is likely to continue to boost the level of activity at this end of the housing market.”